Who Benefits from Upzoning? On Housing Affordability and Equity

By Russell Skiba, PhD

In its rollout of the UDO amendment proposal in October, Bloomington’s Planning & Transportation Department claimed that upzoning to allow plexes throughout the city, but especially in core neighborhoods, would help meet the Comprehensive Plan’s goals of “equitable access to housing” and growth in the city’s inventory of affordable housing. 

Such goals are laudable. Certainly, structural racism remains deeply embedded in American culture. In his article The Making of Ferguson, Richard Rothstein documents the way many segments of American society — the courts; local, state, and federal government; real estate agents; developers; banks; urban planners; and fearful and prejudiced White residents — all helped nurture the racial segregation that continues to plague our society to this day. It is time to bring that period of our history to an end, and to repair the damage it has caused.

But as with any reform, we need to be clear that the proposed new policies will in some way fix the problem, not exacerbate it.

In the case of the UDO amendment, it’s important to understand whether the evidence suggests that the new zoning map will actually improve affordability and equity. Based on current research on zoning, can we expect that upzoning will result in increased equity and housing affordability in Bloomington?  

To What Extent Does Upzoning Increase Affordability and Equity?

The brief answer: It doesn’t.  

Bloomington’s upzoning proponents have argued that social science backs them up when they claim that removing zoning restrictions on dense housing development increases equity in housing opportunity (generally citing studies focused on much larger cities). But far from encouraging affordability, upzoning has consistently been found to result in a decrease in affordability, an increase in property taxes, an increase in average rents, and a reduction in affordable housing units.

Researchers studying upzoning in Chicago over a five year period found that upzoning resulted in higher property prices with no increase in the construction of affordable housing, leading them to conclude that those hoping to address affordability “may need to look for other solutions.” 

Similarly, a 2020 study found that, far from improving affordability, upzoning increases gentrification; the authors concluded that policies such as upzoning “unleash market forces that serve high-income earners, therefore reinforcing the effects of income inequality rather than tempering them.” 

Densification advocates claim that their objectives include greater diversity in Bloomington’s neighborhoods. However, upzoning has not been found to improve equity for people of color and lower income residents, but rather to displace lower income tenants in upzoned areas.  Upzoning accelerates the process of gentrification, and the upward pressure on mortgage payments and rents this brings has been found to drive Black and Latinx residents out, not draw them in.

A study by the Churches United for Fair Housing documented “drastic decreases” in Black and Latino populations in upzoned neighborhoods in New York City after a decade of zoning changes. Another showed that while White presence has in general decreased in New York City, the White population increased in neighborhoods where upzoning occurred, leading the researchers to conclude that “concerns around gentrification and an influx of White residents following an upzoning are warranted.”   

The ‘Filtering’ Nostrum

Faced with such challenges to its assertions about equity and affordability, Bloomington’s Planning Department and other advocates of upzoning have retreated to a secondary argument. 

At multiple neighborhood association meetings discussing the proposed map and amendments, Jackie Scanlan, Development Services Manager for the Planning Department, has stated that increased density due to upzoning  would not by itself affect housing affordability. City Council Member Isabel Piedmont-Smith, at a recent Elm Heights Neighborhood Association meeting (January 23, 2021), proposed that upzoning would instead create a “ripple effect” — as higher income residents move into the new housing created by increased density, their vacated older homes or apartments would sell or rent for less, thereby driving down the prices for lower-income residents.   

This is a central tenet of those who believe that the solution to affordability is simply to increase housing density and new construction. The technical term is filtering. 

The theory is that, with more new construction, available housing “‘filters’ down as wealthier households move to newer units, leaving older homes available to the less wealthy.” 

(Critics have called this the “trickle-down” theory of planning and development, alluding to trickle down economics, the Reagan Administration’s supply-side economic theory that tax cuts for the wealthy would “trickle down” to the rest of society.  In the 1980 Presidential campaign, George H. W. Bush called the theory “voodoo economics.” While some Republicans still cling to it, the idea has been widely discredited by research; Pope Francis, commenting on trickle down theory in 2013, said “This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system.”)

Once again, empirical evidence in support of filtering is thin at best. In 2016, the University of California-Berkeley’s Institute of Governmental Studies — California’s oldest public policy research center — studied different approaches to increasing housing affordability and reducing displacement of people of color and low-income residents. They concluded that filtering is not sufficient to affect affordability, pointing out that the effects of filtering may not be seen for generations. So by the time affordability benefits accrue, the property may have deteriorated too much to be habitable. 

Even advocates of filtering admit that it will have little impact on affordability. In a posting on Planetizen, filtering proponent Todd Litman is able to show that it increases affordability only when he includes middle income residents in the group that benefits. In the end, he admits that filtering “does not provide quick relief to people with very low incomes or special needs.” 

The University of California-Berkeley’s Institute of Governmental Studies studied different approaches to increasing housing affordability and reducing displacement of people of color and low-income residents. They concluded that filtering is not sufficient to affect affordability, pointing out that the effects of filtering may not be seen for generations. So by the time affordability benefits accrue, the property may have deteriorated too much to be habitable. 

Emily Hamilton, a senior research fellow at the Koch-funded think tank Mercatus Center, argues for “repealing exclusionary zoning” but admits that “Even with land use policy that permits abundant housing construction, however, some low-income households will struggle to afford housing. Housing security for these households requires subsidies, nonprofit housing, or government-built housing.” 

This begs the question: If filtering and other strategies to maximize development and density increase affordability and availability only when paired with more reliable strategies that directly address affordable housing, why not simply rely on those proven methods, without resorting to the questionable strategy of filtering?

Who Really Benefits?

Far from increasing equity and affordability, upzoning appears to favor upper-income residents and creates racial displacement; so it isn’t surprising that it has proven tremendously unpopular among those it purportedly helps.  There have been numerous protests against upzoning in New York, Oakland, Los Angeles, Seattle,  and other cities by residents of color, lower income residents, and housing advocates. Just before Christmas, a group of 65 community, civic, cultural, environmental and preservationist groups rallied at City Hall in New York City to demand an end to the city’s upzoning efforts, characterizing 15 upzonings supported by Mayor DeBlasio as “a giveaway to his developer friends and campaign donors.” 

Nowhere are the divisions caused by upzoning proposals more bitter than in Austin, Texas, where the community has been battling proposed upzoning for years.  In the latest chapter of the struggle, thousands of residents have sent individual protests to the City, in order to slow down or halt the rezoning; in response, the Austin City Council is spending $121,000 to hire an attorney to argue that property owners do not have the right to protest comprehensive zoning plans. The LA Tenants’ Union calls strategies such as upzoning “a deregulatory, trickle-down framework for housing policy that does more harm than good.”

If residents of color and those struggling with lower incomes don’t really benefit from upzoning, it’s fair to ask: Who does? 

The obvious and most well-documented answer is big developers and real estate investors. Aprio, one of the nation’s largest and most well-established financial consulting firms, noted that “upzoning will create opportunities for real estate developers and higher property values may encourage real estate professionals to invest in projects located in areas that they have not historically considered.” 

The real estate investment site Millionacres agrees, observing that upzoning will bring “a wealth of development opportunities…barriers [to successful real estate investment] have come crashing down – and now it’s possible to build real wealth through real estate at a fraction of what it used to cost.”  And profits for developers and investors arrive quickly. Research in Chicago (Freemark, 2020) showed that property values in upzoned areas increased almost immediately after the approval of the new zoning.

Tom Angotti and Sylvia Morse’s book Zoned Out! details the harsh consequences of upzoning in a number of American cities. They describe a consistent pattern of development and racial displacement in which developers, seeing a new opportunity, engage in a “flurry of speculative purchasing” that drives property values up, while driving low income and Black and Brown residents out.  The LA Tenants’ Union calls the beliefs behind this process “a dangerous ideology that is funded by the powerful to serve the powerful.”

The Pandemic, Racism, and Zoning Maps

All of this is set within the larger reality of the pandemic. We are all grateful for the arrival of the COVID-19 vaccine. It goes without saying that its approval was contingent upon solid data that it would be effective in preventing COVID-19 without creating harms of its own.

Likewise, our attempts to effect change through policy, including zoning maps, should be shown to relieve suffering and do no harm.  The pandemic of racism, created over hundreds of years through greed, scientific racism, and government policy, has left us with intolerable inequities that we must commit to making right. But just as we would not treat a disease with a cure that harms the patient, we should not replace one form of systemic racism with another. Faced with consistent evidence raising troubling questions about upzoning, the most relevant questions are these:  

Can we really expect to solve critical problems of affordable housing and racial segregation with policies that drive up the price of housing and drive residents of color out?  

Who would really benefit from that?